What They Think of Us and Why They Miss The Point

Matt Kellam sent me a link to a post on BrokerAgentSocial.com from a traditional broker (a CRB) about the disappearance of ‘Discount’ Brokers.  As I read the thing it was clear he was mostly talking about us.

I was struck by how off-target the piece was as well as most of the comments to it.  If you’re curious, this would be a good time to jump off and read it — but come back when you’re through.  Here’s the link:

Whatever Happened to Discount Brokers?

First off, they call us ‘Discounters.’  That’s not new.  But it’s just as false today as it was 5 and 10 years ago.  Calling us ‘Discounters’ assumes that we take their ‘Full Service’ model, strip out the more expensive aspects of it and offer the stripped down model at a lower price.  The truth is:  we strip nothing out.  We do the same things they do (and really, this is no bull: we do more), but we price our services differently so the seller saves on the deal.

Ordinary brokers who know nothing but what they’ve always done take a look at our pricing and try to imagine what their operation would be like if they priced their services that way.  They imagine it would be a disaster . . . and they would be right.  If you put our pricing on their business model, it would fail.  It has failed.  It will always fail.  And you don’t have to be Warren Buffett to figure it out:  If you’re not making any money doing things the way you’re doing them, you’re certainly not going to make more by cutting your revenue.

But, they see us continuing to survive, even thrive and there is a disconnect.  (‘How can those guys afford to stay in business?? There must be some secret!’ ) So they speculate on what that secret might be, and that’s where the spin doctoring  in the BrokerAgentSocial.com post comes from.  It’s stuff like:

  • We rely on the Internet to make our model work and rely less on brick and mortar offices.

That’s not entirely false.  We do exploit the power of the Internet as much as possible to generate leads into our offices.  We’d be foolish not to, wouldn’t we?  And, we’ve always been able to get by fine with smaller physical offices because our model allows a small number of people to do large numbers of transactions.  Don Taylor decided 35 years ago that he was in the business of selling real estate, not in the business of providing a palace for agent-princes to use for coffee time.  We have never needed 200 agents to generate a profit.  We do it with 5 or 6 people; so the 10,000 square foot, Taj Majal office is unnecessary.

  • We use loss-leader pricing on listings and use them to snare buyers to whom we sell full commission MLS listings.

Our seller offering is not a loss leader.  We set our fees based on what it will take to market a property and make a reasonable profit.  I know it was misguided, but 5 and 6 years ago, many Help-U-Sell Brokers made great piles of money just working listings with set fee pricing.  They didn’t even think about the buyer side.  Today we know very well the folly in ignoring the buyer and we aim for a 50/50 mix of buyer sides to seller sides.  What’s different is that the profitable low set fee offer to the seller makes inventory building easier; and a large inventory generates a strong flow of buyer inquiries into the office.  We teach our brokers to create buyer agent compensation on Help-U-Sell office listings that is equal to or greater than what the agent would be paid on an MLS listing so there is always an incentive for our agents to sell our listings first.

  • We use our pricing to get us face to face with a seller and then tack on fee after fee with our menu-of-services.

I guess they think we rent the for sale sign to the seller for $50 a month and flyers are $.25 apiece and helpusell.com costs an additional $2,000.   Really:  the only thing we ‘tack on’ is the other agent.  We make that outside agent an option.  And several years back, may sellers passed that option by because they believed — rightly so — that we could get the job done without it thus saving them a lot of money.  It still works today with a properly priced equity seller.  And, even when they take the option of offering the property for sale through MLS (and then being prepared to pay the outside agent and broker), they will only pay a fee based on how the property actually sells.  So the seller who takes the option at listing who then holds his own open house and thus finds his own buyer, will only pay the Help-U-Sell low set fee.  It’s like:  the breakfast buffet is $10.95, but if you just have fruit, cereal and yogurt and find you don’t need the eggs and bacon, it’s just $4.95.  Makes sense, doesn’t it?*

When they call us ‘Discounters’ they miss the point.  It’s not a discount.  It’s a completely different way to price our services to sellers.  By itself and plugged into the old, tired, agent-oriented business model that is the norm today, it is a disaster.  But that’s not what we do.  We back up the pricing model with a completely different operating system that makes it work beautifully.

When Charles Schwab revolutionized the securities business, he was chided as a discounter.  The old boys couldn’t imagine how they could operate (and pay their brokers) on $15 a trades.  Today the old boys are all pretty much gone, and compared to Schwab, ETrade looks like a discounter!

I keep wondering how long it takes a dinosaur to turn into an oil deposit.

What Is Your REALTOR Membership Worth?

There’s news this week of a large (450+ Agents) brokerage in Columbia, SC dropping its REALTOR membership.  There are a couple of factors in the decision:

  • Many of the agents don’t see a value in belonging and are balking at paying their $400+ share of dues.
  • REALTOR policy on dues dictates that a Broker is responsible for the dues of his/her agents, and must make up the difference if agents don’t pay.

The firm’s owner points out that in the current climate, that policy could cost his company upwards of $100,000, so the solution is to simply drop out.

Columbia, SC is a special circumstance:  while most MLS’s are owned by REALTOR Associations (and thus, become a major benefit of belonging), the Columbia MLS is privately held.  The firm can drop their REALTOR membership and still belong to the MLS.

So, this bit of news begs a question:  If you take away the MLS, what is the value of your REALTOR membership?

There seem to be two sides to this coin.  The dark side says:

NAR and its affiliated State and Local Associations and Boards are tyrannical pseudo trade unions that, under the guise of protecting the public and upgrading the industry, fight tooth and nail to preserve the status quo.

But on the other side, in the light, I hear:

  • REALTOR educational opportunities are outstanding, so much so that I routinely tell people if they want to know how to list and sell real estate, go to their local Board.  We can teach you the Help-U-Sell way to approach nearly everything, the way that makes us different and special.  But if you just want ideas on how to show a house or call on a FSBO, that’s generic real estate and it can be learned at the Board.
  • REALTOR Associations are constantly upgrading the tools of our trade.  Advances in technology, driven mostly by MLSs — which are, again, mostly owned by REALTOR Associations — have moved us light years ahead of where we were just a few years ago.  And that not only benefits real estate professionals, it also benefits consumers who have very good tools now for accessing information and participating in the home search and sale process.
  • NAR and the State Associations are a powerful force for housing friendly legislation.  Their lobbying efforts have benefited everyone pursuing the American Dream of Home Ownership for decades.  Often it is the REALTOR voice on Capitol Hill that keeps sanity in the mix.  How important is this?  Right now, NAR lobbyists are fighting hard to preserved the mortgage interest rate deduction for homeowners.  Congress, in an effort to find more dollars for the deficit, is actually considering ending that great benefit of home ownership.  We’ve faced similar challenges through the years and I’m proud to say the REALTOR voice – the voice of reason – usually prevails.

It’s unfortunate, but this year I think REALTOR Associations across the country are suffering.  Membership is dropping and it’s not just that big firm in South Carolina I’m talking about.  The tough market has driven many from the business and often it’s the annual event of DUES that forces the decision to get out.

I also think REALTOR Associations have to examine the benefits package to members as well as their policy on dues.  I believe the days of the proprietary REALTOR-only MLS are numbered.  Consumers already have access to much of that information online.  So the MLS, while high on the list of benefits, can’t be the biggest reason agents and brokers pay their Board Dues.

What do you think?  Why do you pay your dues?  What’s the biggest benefit you see?

Help-U-Sell for Brokers

Traditional real estate Brokers don’t get us.  They know about our fee structure and wonder, ‘How can they charge so much less and stay in business?  I’m charging much more and can barely make a profit!’

Help-U-Sell Brokers have discovered the secret to charging less and making more.  While the Low Set Fee is at our heart, what makes Help-U-Sell work is bigger than that:  it’s a completely different business model.

First, we put the Broker in firm control:  the business is the Broker’s and the Broker is the business.  The Broker develops and orchestrates the marketing plan, takes the listings (or has an assistant do this for him), captures and controls the leads and hires assistants and buyers’ agents to help when the flow of business is great enough to warrant.  Because the burden of the business is not put on the shoulders of the agents, they work for a reasonable split.  Generally they don’t prospect for listings, call FSBOs or Expireds, race to meet advertising deadlines, work on price reductions or do anything associated with the listing side of the business.  Their job is focused and manageable:  take the buyer leads the office inventory and marketing creates, and convert them to sales.  Period.

Because the Help-U-Sell office is organized around systems – a marketing system, a leads intake system, a client management system, the need for the ‘handholding’ of a traditional listing agent is greatly diminished and seller clients are managed by the Broker and his or her assistants.  The Low Set Fee offer is so appealing that taking listings is easy, so Help-U-Sell offices tend to have more than their share (and therefore tend to generate more buyer leads).

But, what about those listings?  How does a Help-U-Sell Broker charge less and make more.  Here’s an illustration:*

*Commissions, Set Fees and Agent Commission Splits are always negotiable.  The above is an example only.

In a nutshell:  Help-U-Sell Brokers go into the marketplace with a great Seller offering:  Sell your home for a Low Set Fee and save thousands.  This strikes a chord with Sellers and they call for information.  That’s when our systematic approach to the business takes over and most sellers who contact us eventually list with us.  As the Low Set Fee offer generates seller inquiries the listings they create generate leads:  more sellers who want to sell and buyers who want to buy.

Unlike traditional offices where whoever’s ‘up’ gets the call (and usually loses the lead), we take great care in how we handle buyer inquiries.  The Help-U-Sell office’s job is to capture that inquiry, convert it into a solid lead and pass it off to a buyers’ agent who uses a systematic approach to turn the lead into a client and a sale.  Because we take great care with the initial interaction, our Brokers are in a much better position to follow up with buyers’ agents, offer assistance and expect results.

The bottom line is . . . The Bottom Line.  When a bold new approach to the real estate business meets a dedicated, entrepreneurial real estate Broker, profitability is almost certain.  Best of all, saving people money while makingmoney is a whole lot of fun!  Join the quiet revolution!

Download a PDF copy of Help-U-Sell for Brokers

Help-U-Sell for Agents

There is a misconception among traditional real estate agents that Help-U-Sell is not a place to have a great career.  After all, we are not known for paying large commission splits!  And with our Low Set Fee structure, there can’t be much money in it for an agent, right?  Wrong!

First, consider why a traditional broker would be willing to pay a high split.  In that traditional office you are responsible for getting  listings, making sales, finding sellers, finding buyers,  producing your own leads, prospecting, prospecting, prospecting, paying your own marketing and office expenses and on and on.  You are shouldering the lion’s share of the business expenses (and running around like a chicken with your head cut off!) –  so you should be getting the lion’s share of the commission!

But maybe there’s a better way.  Maybe the Broker should take responsibility for developing an effective marketing plan, for producing a steady flow of quality leads, for providing all the tools you need to do your job.  Maybe you should be focused on just one aspect of the business:  taking buyer clients the office has handed to you and turning them into closed sales and satisfied customers.  You’d have no prospecting demands, no angry sellers, no open houses you must hold, no advertising bill to pay.  Because your job description would finally be manageable (and quality leads would be steady), you’d be able to do many more transactions.  That’s the way we do it at Help-U-Sell.

At Help-U-Sell, we expect our Buyers’ Agents to close at least two sides every month — way above the national average.  Because our offices are lead generating machines (and because we never add agents until we have the leads to support them), that’s a very attainable goal.  As a result our agents are happy, calm, excited, busy, productive . . . and they still have lives!  Now, let’s consider the dollars.

While your production may be different (and we invite you to work through these calculations with your own numbers), the average real estate agent production today is less than one closed side per month.  Consider this example:

  • Average Sale Price:  $300,000
  • Average Commission per Closed Side:  3%*:  $9,000
  • Average Agent’s Commission Split:  75%* =  $6,750 per closed side
  • Rounding average production UP to 1 closed side per month (12 per year) = $81,000 Agent’s Gross, from which from which desk fees, marketing expenses, and cost of doing business must be taken.

Now, consider the same parameters at Help-U-Sell:

  • Average Sale Price:  $300,000
  • Average Commission per Closed Side:  3%*:  $9,000
  • Average Agent’s Commission Split: 50%* =  $4,500 per closed side
  • Assuming you meet our minimum production standard for Buyers’ Agents, that’s 24 closed sides a year =$108,000 with NO marketing expenses, no desk fees, no prospecting, no calling FSBOs, no angry sellers . . .

The big difference is that the traditional agent had to develop all of his or her own business.  The Help-U-Sell agent left that job up to the office and focused on turning Buyer leads into sales.  The Help-U-Sell agent also had time for family, friends, hobbies, vacations . . . a life.  Isn’t it time you had one?

*Of course, commissions are always negotiable, as are commission splits.

Download a PDF copy of Help-U-Sell for Agents

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